Oil and gas brought many of them vast riches, but it is to nuclear power that Middle Eastern states are turning their attention in the 21st Century. A growing number of countries across the region want to develop civilian nuclear programmes to meet rising power demand and cut carbon emissions. Chris Webb looks at their progress so far.

 

The recent dates on which Middle Eastern nations announced nuclear programmes, moves possibly prompted by Iran’s commencement of large-scale uranium enriching in 2006, as well as the region’s mounting energy needs

Chris Webb

This September will see the world’s nuclear industry elite converge on the Egyptian capital of Cairo, for the ‘Nuclear Power, Middle East and North Africa 2010’ event. It is a fitting venue, given Egypt’s avowed wish to press ahead at full speed with a nuclear power agenda aimed at supporting the country’s continuing economic development. Iran, Jordan and Turkey will be among others from the region discussing their future nuclear plans at the event.

The prospect of widespread development of nuclear power in the Middle East, with its political hotspots, is not to everyone’s liking. There is a palpable air of ambivalence in some quarters, fuelled on the one hand by a desire to sell nuclear technology to cash-rich nations and on the other by fears of sinister spin-offs, notably the proliferation of fissile materials for use in developing nuclear weapons.

Iran emerges as a civil nuclear power

Nowhere has this been demonstrated more vividly than in the emergence of Iran as a civil nuclear power. The country will finally throw the switch to generate power from its first nuclear plant later this year.

Russia delivered 82 tonnes of fuel to Iran’s 915 MW Bushehr reactor in August, ending a 35-year stop-go construction process in which the country was besieged by sanctions. The Tehran government insists the plant is for peaceful purposes, while the US government fears there are darker intentions and accuses Iran of covertly seeking to make nuclear weapons.

It was back in the 1970s that the Bushehr project began, under the regime of Shah Mohammad Reza Pahlavi, then with the help of Siemens. The German company ended its co-operation after the Islamic revolution, and it was not until a full decade later that Iran resumed the project, signing a $1 billion contract with Russia in 1995.

Last month saw Russia load the fuel into Bushehr, Iran’s first nuclear plant

Yet there are many, too, who see the development of nuclear power in the region as not only inevitable, but desirable, particularly if international efforts to cut carbon emissions and combat global warming are to have any chance of success.

The region first pinned its hopes for developing a coherent nuclear power programme on efforts to spearhead development through the GulfCo-operation Council (GCC), a loose economic and political alliance of six Arab states – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

The GCC said in 2006 that it was studying a joint nuclear energy programme. Qatar was one of those actively involved in the initiative from the very beginning, hosting a key meeting of the GCC Working Group to follow up on an earlier International Atomic Energy Agency (IAEA) feasibility report on the region’s plans.

Little progress has been made to date and a number of individual states have lost patience, choosing instead to go it alone and put their own needs firs`t. Notably, last April, Saudi Arabia said it was building a nuclear and renewable energy ‘city’. Yet of all the GCC states with plans to develop nuclear programmes, it is the UAE that has made the most progress. In December, the UAE awarded a $20 billion contract to a South Korean consortium to build four 1400 MW nuclear power plants by 2020.

THE UAE DECIDES TO GO IT ALONE

Founded in 1971, the seven-state United Arab Emirates’ federal capital is Abu Dhabi, although Dubai is the country’s largest and best-known city. Both cities’ phenomenal growt has created an urgent need to establish more power generation, such as for desalination plants to provide water for a rapidly growing population.

Together, the GCC’s members generate 273 billion kWh per year, almost entirely from fossil fuels, and demand growth between 2000 and 2008 averaged 5–7 per cent per year. They have total installed capacity of approximately 80 GW, feeding a common grid. Latest available figures project GCC electricity demand increasing 10 per cent annually to 2015, and desalination demand growing at 8 per cent, implying the need for 60 GW of new capacity by 2015.

In April 2008, the UAE independently published a comprehensive policy on nuclear energy. With 18 GW capacity, the bloc produced close to 67 billion kWh gross in 2006, 98 per cent of it coming from gas. Here, alone, electricity demand is growing by 9 per cent per year and is expected to require 40 GW of capacity by 2020, with natural gas supplies sufficient for only half of this. Imported coal was dismissed as an option because of environmental and energy security implications. Renewables would be able to supply only 6–7 per cent of the needed power by 2020.

The extensive study concluded that nuclear power emerged as a “proven, environmentally promising and commercially competitive option which could make a significant baseload contribution to the UAE’s economy and future energy security.” The vision was set for 20 GW nuclear from approximately 14 plants, with almost a quarter of this capacity to be in operation by 2020.

Initially, two reactors were planned for a site between Abu Dhabi City and Ruwais, while a third was earmarked for Fujairah on the Indian Ocean coast. Another site mentioned was Sila, in the far west of the UAE close to the Saudi Arabian border, where it could readily supply Qatar and Bahrain.

The UAE duly established a Nuclear Energy Programme Implementation Organization, on the recommendation of the IAEA, which led to the formation of the Emirates Nuclear Energy Corporation (ENEC), an Abu Dhabi public entity, initially funded to the tune of $100 million to evaluate and implement nuclear power within the UAE.

ENEC said it would offer joint venture arrangements to foreign investors for the purposes of construction and operation of nuclear plants in a similar fashion to existing independent water and power project (IWPP) structures, which are 60 per cent owned by the government and 40 per cent by the joint venture partner or partners.

Initial expressions of interest from nine companies for the construction of its first nuclear power plant were whittled down to a short list of three and the project went out to bidding in mid-2009. The three bidders on the short list comprised: Areva, with Suez and Total, proposing its Evolutionary Power Reactor (EPR); GE–Hitachi proposing its Advanced Boiling Water Reactor (ABWR); and a Korean consortium led by Korea Electric Power Company (KEPCO) of Samsung, Hyundai, Doosan and Westinghouse, proposing the APR-1400 pressurized water reactor technology. ENEC said it intended to standardize on a single technology and in December of last year chose the KEPCO-led consortium to build the region’s first nuclear power plant.

ENEC appointed the global full-service programme management, engineering, construction and operations firm C2HM Hill to manage the UAE’s plans, while in July it was reported that UK-based Norton Rose had also been selected to work on the project. KPMG is also advising ENEC on the project and Standard Chartered is working for the project’s contractor, KEPCO. The scheme will comprise four nuclear APR-1400 reactors to be built at a single site in Abu Dhabi’s western region.

SOUTH KOREA wins contract for abu dhabi’s power plant

The value of the contract for the construction, commissioning and fuel loads for four units is about $20.4 billion, with a high percentage of the contract being offered under a fixed-price arrangement. The consortium also expects to earn another $20 billion by jointly operating the reactors for 60 years. In March of this year, KEPCO awarded a $5.59 billion construction contract to Hyundai and Samsung for the first of the plants.

A number of KEPCO subsidiaries are to play key roles in the project. Korea Hydro and Nuclear Power (KHNP) will act as the engineering, procurement and construction (EPC) contractor and as operator; Korea Power Engineering (KOPEC) will provide the nuclear power plant design and engineering services; Korea Nuclear Fuel (KNF) will provide the fuel; and Korea Plant Service and Engineering Company (KPS) will be involved in plant maintenance. KEPCO has said its bid’s selection in the face of strong competition from France, Japan and the US was because it had the highest capacity factor, lowest construction cost and shortest construction time.

Financed largely by the state, without the need for loans, but with some Korean equity partners, the plants are due to be up-and-running by 2020, and the UAE hopes the 1400 MW nuclear plants will be producing electricity at a quarter the cost of that from gas. ENEC is said to be in continuing negotiations with the losing bidders, Areva and GE–Hitachi, regarding co-operation in related nuclear areas.

Last April, ENEC announced that it had lodged licence applications and an environmental assessment for its preferred site at Braka, with the Federal Authority of Nuclear Regulation (FANR) and an environmental management plan is being considered by Abu Dhabi’s Environmental Agency. The site is on the coast, some 53 km west of Ruwais, and emerged from an evaluation process which considered ten potential sites based on guidance from the FANR, the US Electric Power Research Institute (EPRI), the US Nuclear Regulatory Commission (NRC), and the IAEA.

The site is, however, not without its problems. ENEC noted that the Gulf seawater at Braka is about 35 °C, which will provide lower thermal efficiency than the Shin Kori Three and Four reference units being built in South Korea, where the sea is about 27 °C. Consequently, larger heat exchangers and condensers will be required.

In July, ENEC was granted two licences from FANR, including a site preparation licence for Braka and a limited construction licence allowing the manufacture of major components for the four units. ENEC said it still needed to receive a construction environmental permit from Abu Dhabi’s environmental agency before it could begin civil work under the FANR site licence.

ENEC expects to lodge a full construction licence application for Units 1 and 2 later this year, and to start construction of Unit 1 late in 2012 and Unit 2 a year later. Commercial operation is envisaged in 2017 and 2018, respectively, followed by 2019 and 2020 for Units 3 and 4.The UAE is a signatory of the Non-Proliferation Treaty (NPT) and it ratified a safeguards agreement with IAEA in 2003. Last year it signed the Additional Protocol.

EGYPT picks a contractor for its first plant 

Egypt announced plans to build several nuclear reactors to meet rising power demand in 2007. China, Russia, France and Kazakhstan have all offered to co-operate in building them. In June last year, the country signed a deal with Australia’s WorleyParsons for nuclear power consultancy to support the delivery of the first Egyptian nuclear power plant. The contract commences with site and technology selection studies and carries through to design, construction management, commissioning and start-up.

The revenue to WorleyParsons is estimated to be in the region of $160 million over the expected eight years of the project, which will be managed from WorleyParsons’ office in Sofia, Bulgaria, and supported locally by its offices in Cairo.

The US had indicated it could be willing to help Egypt develop its nuclear programme if it chose not to enrich uranium and reprocess spent nuclear fuel, processes that can be used to make weapons-grade nuclear materials.

JORDAN signs a uranium mining agreement

Jordan is another key player in the region to have set its sights on a civil nuclear power programme, having some time ago announced ambitious plans to have a plant operating by 2017, though industry sources believe this to be an unrealistic goal. The country’s government has signed agreements with France, China and Canada to co-operate on the development of civilian nuclear power and the transfer of technology.

Planned and proposed nuclear reactors in the MENA region as of 1 August 2010 Source: World Nuclear Association

Talks began in 2008 with French nuclear energy specialist Areva and last February the country signed a mining agreement for uranium resources in central Jordan, sealing an agreement between Areva and the Jordan Atomic Energy Commission (JAEC). Under the terms of the mining agreement, Areva has been granted the right to mine the deposit for 25 years. The group will pursue its current exploration activities launched one year ago, and conduct a feasibility study covering environmental, economical and technical aspects of the project prior to starting production.

A portion of the uranium produced by the future mine would serve Jordan’s nuclear energy programme. This recent agreement paves the way for a long-term partnership between Areva and JAEC in the development of Jordan’s nuclear power generation programme.

KUWAIT eyes a stake in areva

The need to meet demand for electricity and water desalination has spurred Kuwait to go it alone and to seek to develop nuclear power outside the GCC initiative. The country’s leaders held talks with France’s Areva earlier this year, culminating in the signing of an initial agreement on nuclear co-operation that includes exchanging expertise on the field.

Kuwait may also be interested in acquiring a stake in Areva, as the French company needs the capital injection to finance the expected rapid global development in the nuclear market. 

QATAR gives mixed messages 

There are confusing messages coming out of Qatar, which had initially shown a strong lead in getting the GCC’s nuclear ambitions off the ground, but has been seen to be wavering since the fall in international oil and gas prices in 2008 – from later in that year nuclear power became less economically viable and less attractive.

Yousuf Janahi, manager of business development at Qatar’s state-owned Qatar General Electricity and Water Corporation (Kahramaa), said the potential cost scenarios were changing with the turmoil in financial markets, the economic slowdown and development of alternative fuels. If Qatar decided to go ahead with building a nuclear plant, he said, feasibility studies showed it would be unlikely to bring a reactor into operation before 2018.

Qatar appeared to go cool on nuclear power after the signing in early 2008 of a memorandum with French power giant EDF for co-operation on development of a peaceful civilian nuclear power programme. An electricity distribution and transmission deal worth €470 million ($698.7 million) was sealed at the same time.

Yet, more recently, the country has continued to seek advice and assistance for its nuclear development from countries such as Japan, South Korea, Russia and, again, France. Earlier this year a high level delegation from Kahramaa, headed by vice chairperson Issa Shaheen Al Ghanim, visited Russia and held talks with the Russian Federal Agency for Nuclear Energy (Rosatom). The Qatari delegation attended several programmes and presentations hosted by Russia’s nuclear energy agency, and visited a number of nuclear power plant construction companies. 

SAUDI ARABIA bases its stategy on nuclear 

Saudi Arabia believes its future economic security depends on diversifying its domestic energy system away from fossil fuels. Currently, the country consumes a quarter of the crude oil it produces.

In recent years, the region’s biggest oil producer has experienced a big increase in electricity demand, of 8–10 per cent per year, and this is expected to continue for the foreseeable future. Working hand-in-hand with the GCC, Saudi Arabia is currently extending its power grid across the country and adding a new power plant to the grid, on average, every 20 months.

The country’s leaders are convinced that Saudi Arabia faces serious future political and economic liabilities if it fails to diversify. Consequently, in April, King Abdullah announced that he would establish the King Abdullah City for Nuclear and Renewable Energy in Riyadh.

Although Saudi Arabia has yet to take any formal decision to build and operate nuclear reactors in the country, observers believe it is likely that it is only a matter of time before it does. Part of the reason for this is that Saudi Arabia sees a nuclear-armed Iran as an existential threat. Some Saudi officials believe that if the country establishes its own nuclear power programme, the kingdom will enjoy greater influence over the region’s nuclear development, including that in Iran.

Generally, nuclear power is climbing up the shopping list of all the region’s Arab states. Meena Janardhan, a Dubai-based fellow at the Energy and Resources Institute, summarises why. “Nuclear power is viewed favourably from an environmental standpoint. And it’s in trend with the region, looking at resources other than fossil fuels,” she says.

And, in a recent interview published in London’s Financial Times, Giacomo Luciani, director of the Swiss-based Gulf Research Centre Foundation, said: “Nuclear power is the logical thing for countries in the Gulf to do. When oil was cheap and abundant, it was right to burn it for power. Right now it’s irrational.”

What is certain is that nuclear power could come quickly to the region if cash-rich states such as the UAE buy reactors off-the-shelf from international companies, rather than embark upon the decades-long process of developing the technology themselves.

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